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LenaWriter [7]
3 years ago
8

Phips Co. purchases 100 percent of Sips Company on January 1, 20X2, when Phips' retained earnings balance is $320,000 and Sips'

is $120,000. During 20X2, Sips reports $20,000 of net income and declares $8,000 of dividends. Phips reports $125,000 of separate operating earnings plus $20,000 of equity-method income from its 100 percent interest in Sips; Phips declares dividends of $35,000. Based on the preceding information, what is Phips' post-closing retained earnings balance on December 31, 20X2?
Business
1 answer:
Taya2010 [7]3 years ago
3 0

Answer:

Phips' post-closing retained earnings balance on December 31, 20X2 = $577,000

Explanation:

Note: When 100% shares of a company is acquired it is treated as subsidiary and for its accounting equity method is used.

In that case all balances of subsidiary are added to balances of Parent company.

But if any dividend is received then such value is deducted from carrying value of investment, and any share in profit will be added to carrying value.

All the retained earnings balance is accumulated together of both companies.

Therefore closing balance shall be

Retained earnings balance of Sips at year end

= $120,000 + $20,000 - $8,000 = $132,000

Year end balance of Phips Alone

= $320,000 + 125,000 = $445,000

Total Retained Earnings at year end = $132,000 + $445,000 = $577,000

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Answer and Explanation:

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3 years ago
Malaya Ramirez is organizing marketing research in Central American countries for a large American corporation that is intereste
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The correct answer is letter "D": have the questionnaire translated back into English to check for accuracy.

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Thus, for accuracy purposes Malaya Ramirez should have the English-Spanish translation checked, making it be translated back into English.

6 0
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Exercise 177 Kirk Company issued a $3,500,000, 10%, 10-year mortgage note payable to finance the construction of a building at D
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Answer:

The annual installment payment consists of both interest payments and principal repayment.

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a.

Date                  Account Titles and Explanation        Debit                 Credit

Dec, 31 2020   Cash                                                   $569,609

                         Mortgage Payment                                                    $569,609

Date                  Account Titles and Explanation           Debit             Credit

Dec, 31 2021     Interest Expense                                $350,000

                           Mortgage Payable                              $219,509

                           Cash                                                                             $569,609

7 0
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Answer:

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